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More developments at the ASA

A court has ruled that the South African Advertising Standards Authority (“ASA”) does not have the authority to consider and rule on adverts placed by entities that aren’t members of the organisation.

Regular readers will know that the ASA is frequently used as a forum for dealing with what are essentially trade mark or passing-off disputes. This is because the ASA Code contains provisions that prohibit advertising that causes consumer confusion or involves slavish copying. The ASA also, of course, deals with a range of other issues, such as advertising that is misleading, dangerous or offensive.

The ASA’s authority has, however, always been a bit tricky. The ASA is a voluntary organisation, which means that the only entities who are bound by its rulings are its members (members agree to abide by its rulings when they join). Yet, the ASA frequently rules on adverts that have been placed by entities that aren’t members of the organisation. These rulings tend to be every bit as effective as rulings on adverts placed by entities that are members. The reason for this is that many of the big media companies belong to the ASA and, once they’re informed of a negative ASA ruling, they refuse to touch the advert against which a ruling has been made. It is this system of notification to media companies (including the so-called “Ad Alert”, which requires members to avoid all adverts of serial offenders) – coupled with the ASA’s practice of publishing its rulings on its website – that makes the ASA so effective.

Yet, things are changing. We previously reported on the decision in the case of Medical Nutritional Institute (Pty) Ltd v The Advertising Standards Authority (unreported case no. 15/30142, 18 September 2015). In that case, the court granted MNI, a company that is not a member of the ASA, an urgent order preventing the ASA:

from imposing any sanctions (including Ad Alerts) in respect of adverts for an MNI product called AntaGolin;

from doing anything to stop MNI from asserting in its adverts that AntaGolin combats insulin resistance and assists with weight loss; and

requiring the ASA to remove its negative ruling against AntaGolin from its website.

A similar judgment has now been handed down in the case of Herbex (Pty) Ltd v The Advertising Standards Authority (unreported case no. 14/45774, 5 May 2016). This case was also instituted by a company that is not a member of the ASA, and here the court made a number of orders.

On a general level, the court held that the ASA has no jurisdiction over any person or entity who is not a member of the body. It also ordered the ASA to make it clear in the standard letter that it sends to entities against whom complaints have been lodged, that it has no jurisdiction over them, and that they’re not bound to participate in the proceedings if they are not members.

On a more specific level, the court ruled that:

the ASA may not require Herbex (the advertiser in this case) to participate in any ASA proceedings, or issue instructions or make rulings against the company;

the ASA cannot adjudicate any further complaints involving Herbex;

all past ASA rulings made against Herbex are null and void;

the ASA must remove all rulings against Herbex from its website; and

the ASA can’t require Herbex to pay any further ASA fees, and that it must repay two significant amounts Herbex has already paid (one in the order of R79 000, the other some R89 000).

The judge also made some interesting observations, including that the ASA has applied to have its Code recognised as an industry ombud under the Consumer Protection Act, 2008, but that this application is still pending; as well as the fact that there are other remedies available for advertising that may be misleading, such as those provided for by the Consumer Protection Act and the Medicines and Related Substances Act, 1965.

The judge, however, declined to find that it is improper for the ASA to use the word “authority” in its name (the argument is that this implies powers that it doesn’t have), or that it is wrong for the ASA to use case numbers in its rulings (again, the argument is that this falsely implies certain judicial powers).

It is likely that these two judgments will leave the ASA far less effective than it’s been in the past, with anyone who wants to complain needing to consider and establish whether the other party actually belongs to the organisation. It may also make ASA membership an unattractive option for many companies. Strangely, the latest judgment has been marked as one that isn’t worth reporting. Given how important this issue is, it should be reported. In fact, it probably wouldn’t be a bad thing if the issue was considered by a higher court.